Food & Agriculture Letter on Importance of North American Market

27 de Octubre de 2017

On Wednesday, a big number of organizations that represent the diverse U.S. food and agricultural industry, sent a letter to the U.S Secretary of Commerce, Mr. Wilbur Ross in order to express the importance of the North American Market on this days that NAFTAs modernization is happening.

Here we offer you a summary about that important document.

Dear Secretary Ross: We are writing to respectfully share information relevant to your recent observation that there is not a world oversupply of agricultural products and that harm to American food and agriculture interests from a potential NAFTA withdrawal is an empty threat.

We recognize that the North American Free Trade Agreement (NAFTA) has not benefited some sectors as it has American food and agriculture.

We have endeavored to be helpful to Trump Administration efforts in that regard and agree with the Administrations objective of an improved and modernized NAFTA.

The undersigned organizations represent the diverse U.S. food and agricultural industry that supports more than 21 million jobs from coast-to-coast, provides more manufacturing jobs than any other U.S. manufacturing sector, and accounts for 20 percent of the U.S. economy

Under NAFTA, American food and agriculture exports to Canada and Mexico grew by 450 percent. In 2015, the United States held a 65 percent market share for agriculture products in the NAFTA region, and in 2016, we exported nearly $43 billion worth of food and agriculture goods to Canada and Mexico, making our NAFTA partners the largest export consumers of U.S. agriculture. NAFTA also lowered the price of various inputs throughout the supply chainbenefitting U.S. consumers and helped eliminate non-tariff barriers, making U.S. agriculture more competitive. Of course, NAFTA also has provided U.S. consumers year-round, reliable access to many forms of produce previously available only on a seasonal basis.

According to a study by ImpactECON, if Canada, Mexico, and the United States return to most favored nation (MFN) tariff rates upon any withdrawal from NAFTA, the negative impact on the United States will far outweigh any benefits from higher U.S. tariffs, including a net loss of 256,000 U.S. jobs, a net loss of at least 50,000 jobs in the U.S. food and agriculture industry, and a drop in GDP of $13 billion from the farm sector alone. NAFTA withdrawal would also disrupt critical industry supply chains, close markets, eliminate jobs, and increase prices for the basic needs of American consumers.

More specifically, the detrimental impact that would begin with issuance of a notice of withdrawal from NAFTA includes:

 Corn: Withdrawal would cause U.S. production to fall by an average of 150 million bushels annually.

 Pork: Withdrawal would decrease total U.S. pork production by 5 percent.

 Fresh Fruits and Vegetables: When Mexico applied temporary retaliatory tariffs to apples, cherries, and pears beginning in 2009, losses reached $65 million per crop year, presaging some of the damage that could be done from a full NAFTA withdrawal.

 Rice: Mexico and Canada account for nearly 30 percent of all U.S. rice exports. Exiting NAFTA will open these markets to competitors from Asia and Brazil with no obvious home for displaced U.S. sales, as world rice stocks are rising.

 Beef: In 2016, U.S. beef exports to Mexico and Canada exceeded $1.7 billion and accounted for 27 percent of total U.S. beef exports. Since NAFTA was implemented, exports to Mexico, an irreplaceable market for large volumes of certain beef cuts, have risen nearly 250 percent. NAFTA withdrawal would raise tariffs above 20 percent, causing a reduction in beef exports, a contraction in U.S. beef production, fewer jobs in the U.S. beef industry, and lower returns for U.S. cattlemen, ranchers, and meat packers.

The adverse effects of issuance of a notice of NAFTA withdrawal would be abrupt and particularly severe for Americas farmers, food manufactures, and agribusinesses.

In addition, the European Union is aggressively negotiating an updated FTA with Mexico to expand its sales there by seeking reduced Mexican tariffs on competitive EU export areas and the incorporation of rules creating de facto barriers to trade to advantage those products at the expense of U.S. suppliers. We trust you appreciate how harmful it would be for the U.S. to become the supplier of last resort of major commodities. Accordingly, we submit that it is imperative that America preserve and grow access to markets like Mexico and Canada where we have a competitive advantage over other global suppliers.

Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and food and agriculture producers, in particular

We are sadly confident that issuance of a notice of withdrawal from NAFTA would trigger a substantial, immediate response in commodity markets as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates. Contracts would be cancelled, sales would be lost, able competitors would rush to seize our export markets, and litigation would abound even before withdrawal would take effect.

Therefore, we respectfully ask that the Administration continue to seek positive engagement that would advance Americas economic interests by opening new export opportunities and by tackling non-tariff concerns our industries have identified. That forward progress must begin by maintaining the do no harm pledge toward food and agriculture trade within NAFTA renegotiation.

Thank you for your consideration.

Fuente: Food & Agriculture Letter on Importance of North American Market